To ensure the syndicate operates effectively and within the definition of a syndicated property scheme (and therefore outside of the FCA’s regulatory regime with associated costs) each scheme would be run as follows:
- The developer/vendor will submit their scheme to the syndicate manager (LPS Ltd), with detail on the location, proposed building and units, anchor tenant and lease terms, any additional pre-let tenants, price for the land and price for the building. This will include the payment terms e.g. payment for site initially and any staged payments during construction, desired date for acquisition by the syndicate and projected Practical Completion dates.
- The syndicate manager will then prepare financial analysis to determine projected investor return and confirm suitability for syndication/funding. LPS Ltd will prepare and arrange any bank finance to be included in the scheme. Negotiations on any borrowing for each scheme will only be carried out by LPS Ltd. Borrowing will not, generally, be in excess of 50% of purchase price and borrowing costs will be kept within the anchor tenant rental income stream to reduce void risks.
- Once confirmed suitable for syndication, LPS Ltd will prepare a prospectus for investor circulation, consideration and expression of interest. A potential investor meeting/presentation will be held, to answer questions about the scheme and confirm details. The developer, property and legal adviser will be asked to attend to answer any questions raised in their respective areas of expertise. Investors will be asked to confirm their intention to invest at or soon after the presentation.
- Once the confirmed investor list is compiled and ‘subscription’ is full, LPS Ltd will set up the nominee company, which will accept the investor funds and purchase the site in accordance with the agreed timetable, wherever possible. Each nominee company will take the name of the syndicate in chronological order i.e. LPS 001 Ltd, LPS 002 Ltd. LPS Ltd will be the sole shareholder of the nominee company with Steve Straw and Andy Dyson as Directors. Each investor’s interest will be determined through the Trust Deed, which will define the beneficial ownership of the assets of the nominee company.
- Upon Practical Completion, the property adviser to the syndicate will provide property management services, including collecting rents and remitting them to the nominee company for distribution to investors.
- Syndicate member meetings will be held during the acquisition/construction process to ensure active involvement and decision making by the members.
- Post Practical Completion, meetings will be held annually as a minimum, for syndicate members to attend and receive reports from the syndicate manager, the property manager/adviser and an auditor’s report.
- Any exit strategy will be determined by the syndicate members, upon advice from the syndicates’ advisers.